This
book is about the business side of innovation. I was favorably impressed, to
where I put together a seminar linking this work to my own past writings and
tested it on selected top managers.

I thought
there would be high interest in the topic, given all the talk in the business
and popular press about innovation. What I discovered instead is that managers
are not willing to invest for much beyond motivational talks (e.g., people with
capes in superhero costumes labeled “Innovation Man”) and finding simple rules
for how to pick the winners and losers. That’s not the topic of this book. I
expect the authors would say, “Innovation doesn’t work that way.” So would I.

Rather
the book starts with two key ideas: 1) Innovation is a necessary ingredient for
sustained success, and 2) Innovation is an integral part of the business. (pg.
xx) If you don’t accept these precepts this isn’t the book for you. You have to
believe innovation is a survival issue and be willing to do the work required.
Not all CEOs meet these criteria.

It’s
not that top managers object to having compelling, high-margin products; it’s
that the word “innovation” has been so over-hyped. The subject, as Andy Grove
says, “Is so much easier to talk about than to do.” Hard work isn’t as sexy as
creativity seminars, making deals, and hoping to win the lottery by doing the
next iPod or whatever.

Anyone
who’s been successful at innovation can tell you it’s a messy, difficult
process. If you accept that, the next question, if you’re a business, is how to
manage it.

The
first decision is “Who?” and the correct answer is that two levels of
management are needed. Top management must set goals, provide support, and
monitor progress, but people lower in the organization must be empowered to
implement. Senior executives should be involved in setting policy, goals, and
strategy, but they should not be intimately involved in
designing and operating the elements of innovation. This is a tricky balance.
(pg. xxv)

A
fashionable topic today is outsourcing, but the book says this is the wrong
question to ask. Innovation is simply too important to outsource completely. If
you outsource it, you turn your firm’s future over to outsiders. Conversely, if
you try to do it all yourself you will greatly increase your risk of failure.
In general, success requires perspectives, expertise, and experience from
outside your firm. The book argues that the best solution is partial
outsourcing, better called partnering.
(pp. 100-115)

Bluntly
put, innovation is a voyage of discovery where experienced guides and explorers
can be helpful. The rewards are great, but setbacks and mistakes are to be
expected, as is “organizational resistance” to new things. It’s a difficult
art, and, if you don’t tap the right outside viewpoints and expertise, a hard slog.

Finally,
we get to the issues of metrics and culture. Innovation is not like a quality
initiative where the whole firm is involved all the time. You want the right
people involved, and no more. Small, nimble, and focused is better than large,
ponderous, and inexorable.

Metrics
turn out to be a large part of the problem. Regardless of what management says,
what it does matters more. (pp. 25-28)

If
your metric is Earnings per Share (EPS), it’s not related to innovation, and,
in fact, possibly contra-productive. If your metric is number of products
launched, you will at best get small incremental innovations, and, at worst,
old products with new names. If you view new products as “R&D’s job” you
may get powerful ideas, but will be unlikely to have them fit with what your
business units can produce, market, or care about. Few animals will raise the
young of a different species; most will kill them.

In
short, if your top management views innovation as a corporate survival issue
and is willing to invest and do the hard work, this book will be helpful. But if
you are looking for motivation, quick fixes, and cost savings, it isn’t for
you. I expect it will appeal to only perhaps 10-20% of CEOs, but some of these will
be the leaders of tomorrow’s stellar firms.

Andy
Grove is right. In the end, it gets down to doing, not talking.

What’s your
experience with innovation? Are CEOs and
managers willing to do the hard work? Submit your case study on how
innovation got or didn't get traction to Janice ScanlanCMC, FIMC.

About the Reviewer John D. Trudel CMC
(503/538-1169) helps firms with
innovation, business creation, planning, and renewal.

Some people name iPod as an example of how music distribution has cut out the middleman.

Maybe. Or is there a new kind of middleman? Pandora is an example of a new kind of middleman. For
free, you can build up to 100 radio stations using one, several artists or songs. What
Pandora does is allow you to vote on what you want or don't want--but the
neatest thing is they play music out of that genre so you can discover new
artists. You can also hear clips of music, do research on
artists, and, of course, buy music.

What
was interesting to me is that Pandora was named on National Public Radio by a 20
year old student one of the six hot trends on the Internet.........but the big
thing for marketing people is what a 60 year old woman likes about Pandora and a
20 year old woman is the same--we can discover new artists based on music we already like.

What music we enjoy is likely very different. And Pandora "knows" all of it.

Think about that from a marketing perspective. The possibilities for learning demographic trends to deliver a wide range of product or service segments could potentially expand and apply to any kind of product or service people have an interest.

Especially with a glut of information just a click away--will it be the Pandora's of the world that open boxes of information in ways those interested don't have to search, but can experience?

Just as Pandora is categorizing the "music genome" others such as librarians, professional societies and academics may do the same in other areas.

Is there a Pandora type application in your future?

Do you know of any businesses taking this new middleman approach? Is it gaining any traction?

PS. And Pandora is not just for your computer anymore. There's a new "Squeezebox" that you can enjoy Pandora through out your home with your stereo equipment.

It's not just music. Video has a new search engine.While they don't have "affinity" built in yet (for example, on Amazon people who bought this book, bought this book as well), check out Blinkx

Copyright 2007, Traction. You are encouraged to pass on so long as attribution is given to Traction.

If you've ever heard someone say or said it yourself, "we'll know it when we see it." That phrase describes an approach to tackling a complex subject. Just pinpointing an elusive area of your business can be challenging.

And anyone who's approached a multi-faceted issue knows that you wish you knew as much before you got into the issue as you did afterward. So we're inventing and "making it up" as we go along anytime we approach new territory.

Yet we often can't think creatively because we specify too tightly. A simple example: the need is to fasten two boards together, yet just by using the phrase screw two boards together you've limited the ways to fasten the boards together.

Reading the history of Proctor & Gamble in the book Rising Tide (Harvard Business Press, 2006) provides a candid look the starts and stops in developing and marketing new products . . . or making changes in diversity policies in plants for example.

Change is tough.

Tide detergent was such a difficult product to develop, that the R&D manager of the developer required the developer omit it from his project status reports because it was taking so long to work out the problems.

Can you imagine that happening today? It would take a gutsy manager.

Crest toothpaste had real issues of being accepted by the dental community. However, because there was a focus on what customers needed, these products have been two most successful . . . and lasting. So what we have is "staying the course" but also learning as they go along.

However, there's another facet: these successful products were built around customer needs.Have many of our businesses today become obsessed with making a deal or doing a transaction, not with a purpose that serves a customer need?

Contrast Toyota and GM on developing hybrid cars. Even though Toyota may be losing money initially on hybrids they bet on the future. GM dropped its hybrids. Its focus this past spring was trying to make a deal to buy Chrysler--before that Renault and Nissan. The Wall Street Journal never took GM seriously and pinpointed the ultimate "buyer." Yet I wonder how much energy was spent on this endeavor?

Will GM know it when they see it? I doubt it.

Tide, Crest and Toyota hybrids all have one thing in common: solving a customer need. So yes, they knew it when they saw it or when they would have to work on it further.

Except for making a deal, it's pretty uncertain what GM has in mind--and how it solves a customer need is fairly dubious as well.

Can any of the merger and acquisition people tell me how they will know it if they see it? Much less how it will produce any business traction for GM?

Daimler Benz may come out pretty well. Well, maybe not unless divesting will help them move forward.

Copyright 2007, Traction. You are encouraged to pass on so long as attribution is given to Traction.

February 22, 2007

Editor's Note: Point Counterpoint articles provide alternative views of topics. This article is in response to a December post on Corporate Social Responsibility and specifically to an article mentioned from the Harvard Business Review, "The Link Between Competitive Advantage and Corporate Social Responsibility" (see footnote 2). The question raised is Corporate Social Responsibility just so much fluff and Should Business Stick to Business?

Business Should Stick to Business

by Alis Valencia

Corporate Social
Responsibility (CSR) has arrived.1 Once pursued by companies at the
fringes of the corporate world, it now receives the attention of executives
from corporations worldwide. Look beneath the public relations fluff and you
may find substantive contributions designed to meet an array of important
social and environmental problems. Huzzahs are called for, plaudits
distributed. But is CSR good for people and nations?

On a
superficial level, yes. Otherwise, no. Although CSR has unquestionable
benefits, there need be no relation between social or environmental needs and a
corporation’s CSR strategy. Moreover, both society and the environment would
benefit more if corporations abandoned the notion of CSR and instead focused on
gaining integrity.

What’s
wrong with CSR? From a business perspective, CSR is rarely integrated with
corporate strategy. From a social perspective, CSR serves various needs but
none wholly.

In their
recent Harvard Business Review
article, Michael Porter and Mark Kramer distill three ways companies can do
well by doing good: They can meet social and environmental needs with new
products and services; model social responsibility through their business
operations; and contribute money and expertise to society in ways that also
benefit the business.2

At first
glance, these approaches to CSR seem eminently sensible. To approach CSR from a
strategic, income-producing orientation reduces the role that personal whim or
bias may play and keeps the focus on business. To model social responsibility
is another plus, a demonstration of walking the talk. In neither case, however,
are we really dealing with social responsibility; both are simply smart
business practices.

That
leaves Porter and Kramer’s third category of strategically integrated CSR, to
invest in the development of an area’s social and economic infrastructure so
that company needs can be met. There is no question that such practices by
Nestlé, Unilever, Philips Electronics, and other corporations are significant
aids to development. Like nonstrategic CSR initiatives, however, these
practices produce haphazard, uneven results because business imperatives, not
social or environmental needs, drive CSR-related decisions. Worldwide, small
pockets of society benefit in multifarious ways, but the rest of society is not
helped.

In such
circumstances, companies are undertaking a role traditionally filled by
government, though on a limited scale. Is this good? Is stepping into the
breach to facilitate the operations of a company, and coincidentally benefit
pockets of society, the way to meet public needs? Or should we figure out why
government fails to meet these needs and make changes to strengthen its
capacity to do so?

When we
do this we find an inherent flaw in CSR.

We know
that corruption, nondemocratic practices, and lack of public funds keep a
government from meeting societal needs. We also know that corporate practices
contribute significantly to these circumstances. Here in the United States, we
see how the revolving doors between corporate suites and government agencies
lead to delays in setting regulations and to poor regulatory enforcement.
Corporate contributions to election campaigns assure open doors in Congress and
state legislatures. Lobbyists are more numerous than ever and play a direct
role in writing legislation favorable to their clients. Then too, companies
routinely seek subsidies and tax relief, pursue strategies to minimize taxable
income, and negotiate reduced fines for illegal acts—and so rob governments’
coffers.

To take
from society with one hand and then to give back (much less) with the other
through CSR practices is a fine expression of hypocrisy. So too are the
contradictions found among the practices of most companies that have adopted
CSR in one form or another.

Wal-Mart,
for example, even though late to climb on the CSR bandwagon, exemplifies the
mixed signals that rebut corporate claims to social and environmental
responsibility: The company has committed to reducing energy use and packaging,
to recycling plastic, and to selling organic foods and buying organic cotton,
but by contrast, the company continues its strategy to minimize labor costs
through low wages, part-time jobs, suppliers’ use of sweatshop labor, a
flexible staffing program that leaves employees with irregular and
unpredictable work hours, and a health plan used by fewer than 50% of qualified
employees.

Indeed,
it is not as if corporate leaders are anxious to pursue CSR: A 2006 McKinsey
Global Survey reported that only 8% champion social or environmental causes out
of “genuine concern,” while almost 90% are motivated by public relations or
profitability or a mix of concern and business benefits.3

Corporate
leaders can pursue an alternative to CSR, one that allows business to stay
focused on business, yet benefit society and the environment as well: the
Pursuit of Integrity (POI).

When a
company strives to have all of its practices consistent with one another and
also designed to avoid harming society or the environment, it is engaged in
POI. When it takes responsibility for removing the harms it has caused and
meets or exceeds regulatory standards, it is engaged in POI. When it responds
to a changing environment by aggressively seeking new business opportunities
instead of trying to hold on to what it has, it is engaged in POI. When it
considers employees a valuable asset and treats them accordingly, it is engaged
in POI.

When a
company engages in POI, it is increasing the likelihood of continued success.

Many
companies use their accounting of CSR practices to pat themselves on the back
for doing what they should be doing anyway in response to changing social and
environmental circumstances. Why not take a vow of integrity and lead the
institution of business away from profit mongering and toward a genuine
practice of doing well by doing good?

__________________

1 For ease of expression
I use CSR as an umbrella term to cover socially and environmentally beneficial,
as well as sustainable, practices.

December 15, 2006

Ford Harding of Harding
& Company has recently published Creating Rainmakers: The Manager’s
Guide to Training Professionals to Attract New Clients (Wiley, 2006).
His work is based on interviews of more than 300 rainmakers from professional
service firms including management consulting, law, accounting, architecture,
engineering, and search. Ford spoke with rainmakers who both “sell and do”
(deliver/manage work) about the factors that make rainmakers. Traction was
interested in his experience using this knowledge so “rainmaking grabs hold” in
the firm.

Traction: Your book benefits individuals and firms that both
sell and perform or manage the work. In your experience of implementing
rainmaker programs in a firm of more than 10 professionals, what are the
biggest challenges?

FH: It really depends on the market cycle the firm is
in. When the market is good and everyone busy leading projects, developing
business and staying in touch with relationships just are not given the
importance they have in a less robust market.

However, the probability of
creating and maintaining relationships is not an activity left to an economic
downturn when business is bad and everyone has time.

Successful rainmakers have a system they follow religiously to
schedule time to talk with their network in both good times and bad. Depending
on the relationship and client, they will reach out to a contact maybe once a
year or monthly. Many professionals don’t do this because they suffer from
“call fear” dreading to pick up the phone. They are heavily biased toward maintaining contact by email, which seems
less intrusive and safer. Of course
there are times when you should send an email, but mix your contact techniques.

Email is no substitute for
voice-to-voice or face-to-face interaction.

My advice on email is ask yourself, is sending an email the right
thing to do or are you doing it because you’re “chicken.” When it’s
“chicken,” it’s time to pick up the phone. Like any skill, individuals get
better at phone calls and meetings the more of them they do. In voice-to-voice or face-to-face meetings
you learn things you are unlikely to pick up in an email exchange.

One consultant I know recently took a day
off from billable work to drop by an old client, whose office was located an
hour away. The client looked haggard
and distressed, so the consultant offered to come back another day. “No, I’m just worried about x,” the client
said. X was something the consultant
knew a lot about, and he came away from the encounter with a million dollar
assignment.

This never would have
happened in an email exchange.

When a client wasn’t
satisfied with work you did, it’s particularly critical to reengage after
things have cooled down. You may never get more business from that source, but
you decrease the chances of having someone actively bad-mouthing you.

Traction: Can you provide an example of a successful program?

FH: The most successful programs help potential
rainmakers develop and build business development and working a network of
buyers and influencers into their daily routine.

Awareness programs or even
two-day skill building or “dunking” sessions rarely develop traction and often
run out of steam—even when participants are enthusiastic initially. Rainmaking
requires attention and discipline.

Techniques to stay in front of others vary. We have been unable to identify any specific approaches that are
required: Some rainmakers give speeches and some don’t, some work through
professional associations and some don’t, and so on. Your target market will help determine the approach you use.

For
example, if one is consulting in a niche like oil and gas exploration that is
very centered in a few places, like Houston and Calgary, so that you can get
maximum face time with prospective clients, by allowing you to schedule visits
or meals with them. However, if one is working with power companies, which are
scattered all over the map, you will need a different sales approach, because
frequent face-to-face visits are too costly and time consuming. Individual
strengths and interests vary, too.

It’s important to get out
in the market place at least once a week and practice your business development
skills. Let’s face it, you learn more
from applying skills to actual situations as they develop than you do sitting
in a classroom.

Who takes to rainmaking is
less predictable than one might think. High potentials sometime fizzle and the
most unexpected succeed. We’ve found one-on-one coaching and mentoring with a
select few yields much higher long-term payoffs.

Traction: What about programs that flounder? Are there common
reasons?

FH: Yes, there are several common factors that
undermine rainmaking efforts.

1)Forcing everyone to participatein the program, results in it being seen as just
one more thing that management is making busy consultants do.

2)Placing individuals who are low potential in
initial programs that have not yet produced successful rainmakers, because
that sends a message the program is only for underperformers.

3)Not creating a cache’ or exclusivity of the program. Creating early success breeds more
success—and attracts committed individuals. I suggest that individuals
volunteer initially, so that you attract the most motivated people. Once this group starts to succeed, word will
get around and everyone else will want to get into the program.

4)Not getting management alignment around the program. If a consultant’s immediate supervisor is not a rainmaker,
himself, but rather a good project manager, he may actively discourage younger
consultants from engaging in non-billable activity, like relationship
development calls. That will undermine
the program.

Traction: Can you provide examples of people who no one
expected to become rainmakers, who did?

FH: I can cite many such cases. Two come to mind. Both
consultants were introverted and shy, and didn’t stand out as likely to make it
as rainmakers.

The first, sole
rainmaker in the firm’s oil and gas practice quit and a senior consultant was
given an opportunity to re-build the practice—with no guarantees of keeping his
job if he failed. In one year, he increased practice revenues from $800K to
$5M. He did this by 1) personal commitment and relentless effort, 2) being
reliable and liked by his clients 3) quickly identifying those few areas where
his firm had a competitive strength in his market and focusing his efforts on
these offerings 4) identifying a
technique that would allow him to meet many buyers quickly and then staying
in touch with them once he did.

The second consultant was
young and had a slight speech impediment. He took advantage of a rapidly
expanding market, and so was in the right place at the right time. He was rock-bottom reliable with his clients
and worked hard to develop a network. He absolutely relentless about meeting
and staying in touch with people and found that his speech impediment often
resulted in clients wanting him to succeed.

Traction: Are there common factors that go into being liked
by clients?

FH: Not in the sense of style or a “winning”
personality. I worked with one
individual consulting in information technology. He came across like an android—you’d expect to find circuits, not
tissue if you scraped off his skin. He found a network of individuals just like
him and was very successful.

There are common factors
to success. 1) Talk to people 2) find ways to meet new prospects 3) know what
advantages you offer 4) have a reason
to stay in touch that is not perceived as pushy. There are a variety of ways to
approach these needs. If anything, our experience has taught us not to be
doctrinaire. I’ve seen cookie-cutter firms where everyone fits a common profile
and there is one firm wide approach to going to market – and they succeed. More common are one-of-each-kind firms where
rainmakers have different approaches to winning new business.

Traction:If a professional
service firm is considering a rainmaker project, what factors do they need to
be thinking about? How would they best judge if this is an approach for
them?

FH: The initial factors are clear goals of what the
firm wishes to accomplish coupled with the commitment to provide the
participants the support they need. A two-day “dunking” is unlikely to have a
lasting impact.

About the author. . . Ford Harding is the author
of Creating Rainmakers (Wiley 2006)
and the founder of Harding & Company, a firm which helps professionals
learn to sell. He has spent almost 30
years in consulting and can be reached at fharding@Hardingco.com.

What's your experience? Have you had experience with "Creating Rainmaker" projects? How did you get those or did they grab hold in your organization? Comment below or email me directly.

Professional service firms where individuals sell only. In professional service firms where individual sell (but don't do the work), the same needs for internal networks may be as important as external networks. Especially in organizations providing services that "pull" other products or services, developing offerings across divisions may be more challenging than working opportunity networks or managing accounts. Ford's comment about stage in business cycle is particularly interesting here.

Copyright 2006 Traction. You may distribute so long as attribution is given to Traction and a web link is used.